Tuesday, February 24, 2009

1. Student Aid is Up, but College Costs Have Risen Faster by Libby Sander for the Chronicle 2007

Higher education has become increasingly privatized.

Over the last decade, aid to college students has increased by 82% but currently doesn’t cover the average price of a college education. In 2006-7, $130 Billion dollars in grants, federal loans, work study funds, and education tax credits went to college students. Additionally, students borrowed $18 billion from state and private lenders.

Subsidized Stafford loans accounted for less than 1/3 of total student loans in this period. Ten years earlier, that ratio was 54%. Similarly, Pell Grants for Low Income Students now cover 32% at the average 4-year college, as opposed to 52% 20 years ago. Ultimately, federal loans make up less than half of undergraduate aid, whereas private loans represent 25% of all education loans as opposed to 6% ten years ago.

Growth in private loans was 27% a year for five years until 2006-7, when it slowed to 6%.

While elite public and private colleges have gotten media attention for their efforts to increase the enrollments of low income students, some indicators, particularly Pell Grant statistics, demonstrate that this has not been effective. At the 75 wealthiest private schools, enrollments of Pell Grant recipients dropped from 14.3% in 2004-5 to 13.1% in 2006-7. Similarly, in the 39-best endowed public schools in the nation, enrollments of Pell Grant recipients dropped from 19.6% to 18% in 2006-7. Between 2004-5 and 2006-7 enrollment of Pell Grant recipients and both public and private 4-year schools decreased by 7% due to the stagnating purchasing power of the grant. Instead, lower-income students enrolled at 2-year and for-profit schools.

Some critics argue that selective colleges are becoming “class segregated”, but others argue that this is not the entire picture. Some argue that there are problems with looking at Pell Grants as the prime indicator of the enrollment of low income students. First, some schools who have a high enrollment of international students or have large adult-education programs may not be properly represented by their Pell Grant data because both those other demographics effect undergraduate enrollment totals. Secondly, some universities report their Pell Grants differently particularly if they have a multi-campus system. Nontraditional students are much likelier to receive Pell Grants and so schools with more nontraditional students will look better even if they don’t really help that many low income students right out of high school. And others argue that some states just have more “high-achieving, low income” students then others, and so Pell numbers represent demographics instead of policy.

3. Double Whammy of Disadvantage

Review:

This article reviews the findings of the Pell Institute for the Study of Opportunity in Higher Education on students who are both low income and first generation. The study found that low income first generation students are disproportionately represented in 2-year public or for profit schools and that they are less likely to transfer either to another school or a 4-year college. Only 14% of first generation low income students transfer from 2-year public or for profit schools into 4-year institutions. In contrast, 25% of students who are either low income or first generation transfer into 4-year institutions, and 50% of students who are neither transfer. Vincent Tinto, one of the researchers, argues that “while college access has increased for this population, the opportunity to successfully earn a college degree, especially the four year degree, has not.” However, when low income first generation students enroll in 2-year public colleges, almost 2/3rds of them intend to earn a Bachelor’s degree. Yet, 26% do not return for their second year.

The researchers list a battery of potential reasons for the underperformance of low income first generation students, such as: 1.delaying entry into postsecondary education after high school. 2. attending college part time 3.working full time while enrolled. 4. having dependent children 5. being a single parent 6. having a GED.On average, first generation/low income students have three of the above risk factors.

Most importantly, low income first generation students are likely to have more unmet financial need than other students and also work significantly more.

The authors of the study recommend the following to public 2-year or for profit schools:More students should be encouraged to enroll in 4 year schools where their chances of earning a Bachelor’s will improve.Strengthen academic prep for colleges with college prep class in high schoolIncrease financial aid for college.Strengthen transfer counseling.Better bridge/orientation programs and special programs for at-risk populationsEncourage engagement on the campus, particularly by creating better work study policies.

4. Chess Inc. Brief History of Financial Aid: NOTES

Important Dates/Events in terms of Need and Accessibility

1944 GI Bill: June 22, 1944 Roosevelt signed the Servicemen’s Readjustment Act of 1944. Popularized the idea that large numbers of people could benefit from a college education.

1950: Institutions develop their own formula for the distribution of funds due to the growth of endowments and scholarship funds.

1954: The College Scholarship Service (CSS) founded by 95 private colleges and universities in the northeast. They developed a standard need analysis system to determine need of applicants based on family income and assets. Developed a form to collect info from students and charged students a fee for each college to which the info was sent. This became the established method of allocating need based aid.

1956: A tentative national system, developed by the higher education community for use in awarding institutional aid, was in place. This was the beginning of a philosophy that aid should be awarded on the basis of need.

1958: National Defense Student Loan Program offered long-term low interest loans to qualified students initially in fields of academic study that would give American a competitive edge in the cold war. The NDSL was later renamed the National Direct Student Loan Program and is now known as the Federal Perkins Loan Program.

1960’s: The EOG (later the Supplemental Education Opportunity Grant program, and then the Federal Supplemental Education Opportunity Grant) was the first federal grant program providing federal student assistance in the form of “gift aid” that didn’t need to be paid back. This was intended to help the neediest students.

1964: Economic Opportunity Act by President Lyndon B. Johnson to fight the war on poverty. Federal Work Study gave federal funds to schools so they could provide needy students with part time jobs while pursuing their college degrees.

1970: Reauthorization of the Higher Education Amendements created the Basic Opportunity Grant, known now as the Federal Pell Grant Program. Intended to serve as the foundation of an undergraduate’s financial aid package. Other aid would be added up to the limit of the student’s financial need.

1978: Middle Income Student Assistance Act: (more aid for middle income students). Eliminated income restrictions for the GSL which extended eligibility upward.

1980: Higher Education Amendments: (more aid for middle income students) Plus loans established so that middle income families could borrow $3000 a year for each dependent child regardless of income.

1981: Omnibus Budget Reconciliation Act: Congress stopped the expansion of student loan eligibility and created a new need-test to limit student loan interest subsidies to applicants with family incomes below $30,000.

1986: Higher Education Amendments of 1986: Limited the PLUS loan program to parent borrowers, eliminating graduate students and independent undergraduate students. Also established limits on the duration of a student’s eligibility for Pell Grants to a certain amount of years of full time enrollments. The SEOG became prioritized for Pell Grant recipients.

1987: Congress eliminated the right of institutional professional judgment to increase Pell Grants to students. They also took away the availability of Pell Grants to students enrolled in less than half time.

1992: Creation of the FAFSA. Mandated a single need analysis methodology, the Federal Need Analysis. Added a community service requirement to Work Study and eiliminated financial restraints on eligibility for less-than-half-time. Some institutions opposed the decision to exclude home equity as a factor in determining ability to pay, and CSS developed a Profile as a supplement to the FAFSA which many private schools use to award private funding.

1993: Student Loan Reform Act reaffirmed the use of professional judgment in the Federal Pell Grant Program.

1998: Raised the maximum authorized funding levels for the Pell Grant and extended Pell Grants to post-baccalaureate students preparing to teach.

5. Student Debt and the Spirit of Indenture: Jeffrey J. Williams 2008

In this article, Williams compares the policy of student loan debt to indentured servitude in the American colonies. Williams argues that student indebtedness is a labor issue, and it is a question of exploitation. Students go to college to better their employment opportunities, but, Williams argues, the exponential escalation in student indebtedness “violates the spirit of American freedom in leading those less privileged to bind their futures”. The prevalence of student-loan debt turns education from a public entitlement to a privatized service or consumer good for a commercial market, not a polis. This was not always the case. After WW2, the higher education system was remodeled to create equal opportunity. This was seen as a benefit to the entire nation, ensuring a stronger America by educating its best talent regardless of class, race or gender origins. In 1947, the Report of the President’s Commission on Education emphasized that “free and universal access to education must be a major goal in American education”. The commission warned:

If the ladder of educational opportunity rises high at the doors of some youth and scarcely rises at the doors of others, while at the same time formal education is made a prerequisite to occupational and social advance, then education may become the means, not of eliminating race and class distinctions, but of deepening them.

Williams uses a series of indicators to explore the student-loan debt landscape. First, student loan debt is widely prevalent - 2/3rds of college students take out loans to finance their education, and on average, graduating students are in approximately $19,000 deep. This is a dramatic increase over the last twenty years - in 1984, average student loan debt was $2,000. By 1994, it was $9,000. We can only assume that it will continue to increase at this doubling rate every ten years unless checked. Also, private loans have increased in dominance. In 1996, only 1% or students took out private loans - by 2004 5% did. These are not short term loans - even the federal Stafford is amoritized over a period of 15%/ If loans are consolidated or refinanced, the term often becomes 30 years. This puts students in a position to be paying off student debt until they retire. Williams relates this to indentured servitude by also emphasizing the fact that these loans are not based on property, but by obligating the person on his future labor. This is a central strategy of venture capital. It is almost impossible to break contracts for federal student loans. Most important for the purposes of this course is tha fact that loans are more likely to be taken out by lower-income students. Williams explains that “the one-third without student debt face much different futures, and are more likely to pursue graduate and professional degrees (3/4s of those receiving doctorates in 2004 had no undergraduate debt, and 40% of those not pursuing graduate school attributed their choice to debt.) An interesting fact is that the federally guaranteed student loan program was originally a non-profit corporation but over the last few years Sallie Mae became a private-for-profit corporation with high profits. Also, federal aid is more likely to be allotted into loans then into grants.

Williams offers two solutions. The first, and best, he argues, is “FreeHigherEd” as proposed by the Labor Party. This would guarantee tuition-free education at public universities (with the tuition paid by the government) for all qualified students. This would cost approximately $50 billion a year. The next best solution are “Income Contingent Loans” based on the Australian and United Kingdom models. This payment plan create a minimum income below which one does not have to pay. In Australia, this is about $23,000. Payment could be collected through tax forms. The College Relief Act of 2007 created an “Income-Based Repayment Option” that is much less generous and based on an almost incomprehensible algorithm.

6. How colleges perpetuate inequality by Peter Sacks

in 1970, 6% of students from the lowest income families earned a bachelor’s degree by age 24; in 2002 this statistic was the same. in this article, Sacks reviews the contemporary debate on the class divide in higher education through reviews of recent books. Daniel Golden’s The Price of Admission: How American’s Ruling Class Buys Its Way into Elite Colleges discusses how children of privilege meet relaxed admissions standards and receive personal assistance at selective schools in return for parental donations. He argues that a school such as Harvard, with a $25 billion endowment, doesn’t want the smartest students but rather the ones with the best likelihood of becoming executives, lawyers, bankers or politicians. Similarly, legacy admissions and celebrity admissions further benefit those of higher incomes. A Notre Dame official is quoted as saying that a regular applicant must “walk on water” to have any chance of getting in. Ultimately, colleges define merit by standards which continue to disproportionately benefit priveleged students.

Sacks goes on to argue that the SAT is not a good enough indicator of intelligence or ability despite its staple as the defining criteria of college admissions. However, SAT scores correlate directly to parental income and education, and so Sacks argues that the SAT really only reflects a students cultural and educational capital. He uses this to emphasize that “children of the intellectually elite” are also favored in the college admissions process.

Sacks also argues that despite the efforts of higher education to increase diversity of its students, it has “largely ignored socioeconomic disadvantage in their calculations of merit and their definitions of diversity”. He sees this practice within the private university in particular, showcasing the emphasis on maximizing endowments rather than serving the public good. Central to doing business this way is rating high on the US News and World Report’s annual list of America’s Best Colleges. To score high on this list means admitting students with high SAT’s to boost the average, a low admittance rate, and to show a high “yield rate” - or how many students who actually are admitted that actually enroll. In the admissions office, Sacks argues, low income students have few to no advocates.

The big questions Sacks presents is the following:

For all but the richest institutions, enrolling more low-income students boils down to a trade off: Do you provide full scholarships to a limited number of low income students who meet existing admissions criteria for grades and test scores, or do you greatly expand access but provide limited amounts of financial aid for needy students?

Over the last few years, there have been highly publicized efforts by top institutions to ease the financial burden on low income students through loan caps, grant-for-loan programs and full rides for students under a certain income bracket. However, these tactics are only feasible because so few lower income students are admitted. Sacks argues that to create a more equitable higher education system, universities must “open up the SAT filter”. Even if schools decrease their target SAT average by about 200 points, the 28 top colleges would have to increase their enrollment of low income students by 3,300.

Finally, Sacks uses Golden’s thesis to argue that universities must create “wealth blind” admissions and prevent conflicts of interest. More interestingly, however, is that Sacks argues that if we really want to see higher education serve the public good, a big-name flagship institution such as Harvard or Princeton should stop cooperating with the US News College rankings, and presumably the rest of the schools may follow suit.

COLLEGE AND SOCIAL CLASS: The Broken Promise of America John Raines with Charles Brian McAdams Ball, Stephen J. Education Markets, Choice and Social Class: the market as a class strategy in the UK and the USA Sacks, Peter. Tearing Down the Gates: Confronting the Class Divide in American Education. University of California Press, 2007 Adair, Vivyan and Dahlberg, Sandra L. Reclaiming Class: Women, Poverty and the Promise of Higher Education. 2003 Shipler, David K. The Working Poor: Invisible in America. New York: Alfred A. Knopf, 2004. Zweig, Michael. What's Class Got to Do With It?. Ithaca and London: Cornell University Press, 2005. pp. 161 - 183;

Thursday, January 29, 2009

The New York Times reported that Obama's stimulus plan, which just passed the House (with no Republican votes!), has unprecedented provisions for aid to education. This would include an increase of subsidies to private student loan lenders to keep loans available for students.

Most importantly, however, is a substantial increase to Pell Grants, which are federal grants awarded to low income students who are US citizens. Distribution of aid is determined by financial need as based on the FAFSA; expected family contributions (EFC) must be less than $3,850. Most students who receive Pell Grants have a family income of below $20,000, although families making up to $50,000 may be eligible. The maximum award per student is around $4,700. The stimulus plan dramatically increases spending on Pell Grants to $27 billion from $19 billion. This would effectively be seen as an increase of about $500 per student per year. Additionally, $490 million would go toward work study programs. Unsubsidized Stafford Loan limits would increase by $2,000 and the DOE would get $50 million for additional student aid programs.